The Third Time’s The Charm

Or it will be. Or it could be. Maybe.

Growth

Germany’s Second Economic Miracle Is Ending – The cognoscenti of international economics are once again agape, and not in a flattering way, at the budget surpluses Germany’s government keeps running, when instead it should be stimulating the economy with tax cuts and higher spending. The surplus revealed this week for 2019, at 13.5 billion euros ($15 billion), is the fifth in a row, and the biggest ever.

Many Germans still regard such numbers as signs of economic virtue and virility, as they keep slashing public debt and reveling in high employment numbers. Alas, these positive indicators are likely to be lagging, not leading. That’s because an unusual era is drawing to an end, one that was likened by Bert Ruerup, one of Germany’s top economists, to a “second economic miracle.” (The first was West Germany’s long postwar rally).

In the past 15 years — somewhat coincidentally, the reign of Angela Merkel as chancellor — Germany turned from the “sick man of Europe” to the continent’s export powerhouse and growth engine. In the next 15 years, Germany won’t necessarily become sick again. But, as Ruerup puts it, it could simply turn economically “gray,” with meager growth indefinitely.

German Of The Day: Tiefstand

That means lowest level. You know, like the current 23-year low in German car production?

Tiefstand

German car production fell to its lowest in almost a quarter of a century as Europe’s biggest economy suffers from the fallout of a global trade war.

Automakers including Volkswagen AG, BMW AG and Daimler AG produced 4.66 million vehicles in German factories last year, the weakest since 1996. The country’s VDA car lobby, which published the figures on Monday, said the 9% decrease was a result of waning demand from international markets.

The industry is set for more tough times this year. The VDA predicted global car deliveries will drop to 78.9 million vehicles from 80.1 million in 2019.

German Of The Day: Fachkräftemangel

That means a shortage of skilled specialists.

Skills

And Angela Merkel HERSELF has warned Germans of a possible exodus of businesses from Germany if nothing is done about this acute problem.

Doesn’t really make sense, though. She brought around two million skilled specialists into the country not all too long ago, or at least that’s how the German media and others painted it. And some 200,000 skilled specialists keep pouring into Germany each and every year. Surely there must be some misunderstanding here somewhere, some disconnect.

Weil kein qualifiziertes Personal gefunden wird, bleiben viele Stellen in deutschen Betrieben unbesetzt. Die Kanzlerin fordert eine Lösung für den Fachkräftemangel. Ansonsten drohten drastische Folgen.

German Of The Day: Abschwung

That means downturn.

Downturn

German industry hit by biggest downturn since 2009 – Output falls 5.3% in year to October, weighing on eurozone growth outlook.

Germany’s sprawling industrial sector is suffering its steepest downturn for a decade, underlining how the engine of the eurozone’s biggest economy is sputtering.

In der deutschen Industrie geht der Abschwung mit einem schwachen Start ins vierte Quartal weiter. Im Oktober haben die Betriebe ihre Gesamtproduktion erneut deutlich zurückgefahren.

 

Speaking Of The German Automobile Industry

And German industry in general. They couldn’t laugh off Tesla. Now the punches are coming in hot and heavy.

DaimlerAuto

German Industrial Job Losses Top 80,000 With Daimler Cuts – Germany’s economy may have narrowly avoided a recession, but the pressure on the country’s industry shows no sign of abating.

Daimler AG said this week it will shed 10% of management positions at its Mercedes unit, lifting the tally of job cuts announced this year across Germany’s manufacturing sector to more than 80,000, according to Bloomberg calculations.

Companies from Volkswagen AG to Siemens AG are letting workers go as Germany’s powerful automotive industry struggles with a shift toward electrification and self-driving cars, and makers of machinery and robots are hit by slower exports and trade disputes. Makers of well-known German products such as Meissen porcelain and WMF kitchenware are also trimming their workforce.

Spend More Like We Do

Says the EU. We don’t always know what we’re spending it on but we sure know how to do it.

Waste

As “German industrial orders fell more than expected in August on weaker domestic demand, adding to signs that a manufacturing slump is pushing Europe’s largest economy into recession,” the EU Commission advises Germany to spend more.

And EU knows all about spending other people’s money. It spent nearly four billion euros last year alone on things it can’t even account for – and most of the things it can account for are wasteful enough.

Konjunkturschocks“ – EU-Kommission drängt Deutschland zu mehr Ausgaben

Brewing Has Always Been Big In Germany

An Industrial Crisis Is Brewing in Germany – The country’s position as the “engine of Europe” is under genuine threat.

Germany’s industrial sector contributes more than one-fifth of GDP and is usually a huge asset. Right now this export engine is pulling the economy down. Signs of distress are everywhere. German manufacturing activity is at a decade low, according to IHS Markit’s purchasing manager’s index. The Ifo Institute estimates that more than 5% of manufacturing companies have cut working hours and about 12% expect to do so during the next three months. German machinery orders declined 9% in the first six months of the year, according to the VDMA association, which represents the country’s engineers. In chemicals and pharmaceuticals, domestic production fell 6.5% in the first half of the year, while domestic car output has fallen 12% this year. Auto exports have dropped 14%.

German Of The Day: Freier Fall

That means freefall.

Freefall

German manufacturing reports industry ‘in freefall’ – Key survey points to weakest sentiment in nine years.

The Ifo Institute’s manufacturing business climate index slumped to minus 4.3 in July from positive 1.3 the previous month. The reading was the lowest in more than nine years and echoes a separate survey released on Wednesday that pointed to mounting troubles in Europe’s powerhouse economy.

“No improvement is expected in the short term, as businesses are looking ahead to the next six months with more pessimism.”

German Of The Day: Erfolglos

And while we’re at it, fassungslos und ahnungslos.

Fassungslos

That means unsuccessful, stunned and clueless, respectively. And all three apply to Germany’s foreign minister Heiko Maas, who just got a taste of the real world in Tehran during his pitiful attempt to salvage what is left of the 2015 nuclear agreement with Iran – for world peace, of course (and for German corporate interests in the region, coincidentally).

The German foreign minister appeared somehow surprised to discover that the mullahs are upset with Europe as “so far, we have not seen practical and tangible steps from the Europeans to guarantee Iran’s interests.” This is because, well, they can’t. If you aim at being weak long and hard  enough then weak you shall be. But there’s a bright side to this, I guess. German diplomacy would not be German diplomacy without the foreign ministers fervent hope that “ways can be found to reduce current tensions through dialogue.” Good luck with that, Heiko.

By the way, anybody in Germany who repeats the word “dialogue” long and hard enough can become German foreign minister, too.

Außenminister Maas in Iran – Zwischen erfolglos und fassungslos.

I’ll Go With “Systematic Issue”

Specifically, it’s a systematic decline caused by systematic dishonesty and corruption.

Deutsche Bank

The simultaneous decline of Volkswagen, Deutsche Bank (DB), and Bayer has been nothing short of stunning. It raises the question as to whether it is merely coincidence, or if there is a larger systemic issue in play.

At Harvard’s 368th Commencement this past Thursday, German Chancellor Angela Merkel spoke of her life experiences growing up during the Cold War in post World War II Europe.

On this cool and overcast day, she also gave advice to the graduates on how to live their lives. She obliquely mentioned the trade war and indirectly criticized President Donald Trump — which got a round of applause. She even quoted the German poet, Hermann Hesse, saying “in all beginnings dwells a magic force for guarding us and helping us to live.”

There was one topic, however, that Merkel didn’t broach, perhaps not surprising given the celebratory nature of the day. Merkel made no mention of the economic dysfunction and even decay that seems to be infecting Germany — particularly when it comes to Germany’s largest and most prominent companies. The simultaneous decline of Volkswagen, Deutsche Bank (DB), and Bayer has been nothing short of stunning. It raises the question as to whether it is merely coincidence, or if there is a larger systemic issue in play. Either way, something is rotten in the state of Germany.